VietNamNet Bridge - Analysts have noted that equitized state-owned enterprises (SOEs) tend to choose  conglomerates with powerful financial capability - real estate developers or financiers - which do not have relations to their core business fields, as their strategic shareholders. 

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The Vietnam Feature Film Studio (VFS) has finally fallen into the hands of a waterways transport company, which clearly has no relation with film production.

Why was a transport company interested in a film studio? The answer, according to analysts, is that the investor can see big benefits it can expect from the large land plot VFS leases from the state.

In principle, VFS has to pay rent to the state for use of the land area;,however, the rent is much lower than the market price. Meanwhile, the land plot was not taken into account when assessing the enterprise. 
SOEs tend to choose  conglomerates with powerful financial capability - real estate developers or financiers - which do not have relations to their core business fields, as their strategic shareholders. 
Large land areas in Hanoi and HCMC enterprises have the right to lease from the state.  This was the major reason real estate developers and financial groups wanted to invest in them.

In late 2015, when Vegetexco, a vegetable & fruit corporation, finished equitization, analysts found out that the strategic shareholders of Vegetexco were all companies owned by Do Quang Hien, a very well known businessman in Vietnam, who invests in many business fields, from football club, electronics, industry, to finance & banking.

The three strategic shareholders who bought 60 percent of Vegetexco’s stakes all belonged to Hien, or they are the companies in which Hien holds the controlling stakes.

Vinamotor, which the state once planned to develop into a key automobile enterprise, is another example, The investor who acquired 97 percent of Vinamotor’s stakes was a big player in the real estate and finance sector, with no experience in automobile manufacturing.

Analysts commented that what the shareholders targeted when buying the stakes of equitized SOEs were not factories, distribution networks or labor force, but land plots on advantageous positions, on which they would be able to develop real estate projects in the future. 

This also explains why the stake buyers were mostly real estate developers and financiers.

The analysts have warned that criteria for SOEs for choosing strategic shareholders have been ignored.

In the case of Vinamotor, TMT, also an automobile manufacturer, could not compete with powerful financial groups and real estate developers, to buy Vinamotor stakes, though it wanted Vinamotor to develop the automobile industry.

TMT was not shortlisted as the Ministry of Transport, the governing body of Vinamotor, stated that only the candidates who had the chartered capital equal to the value of the shares offered could join the race to become Vinamotor’s shareholders, or VND1 trillion.

Pham Huyen